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of <h1>Service tax not leviable on 1997-2001 contract; pre-2006 'consulting engineer' definition inapplicable; Section 65(105)(zzzza) from 1-6-2007 applies</h1> HC held that the assessee's services during the relevant period did not fall within the pre-2006 definition of 'consulting engineer,' so service tax ... Consulting Engineer Service - classification of the contracts - whether on the date of relevant assessment period the service rendered by the assessee has to be classified under the definition Section 65(13), as 'Consulting Engineer' and whether the assessee can be brought into tax considering the work executed by the assessee as a 'Works Contract' - HELD THAT:- From the combined reading of the definition of Consulting engineer prior to 2006 and after 2006, it is clear to the Court that the service rendered by the Company had not been included under the definition of consulting engineer prior to 2006 as it stood under Section 65(13). As a matter of fact, this Court has decided the said point in CEA 12/2007 on 1st April 2010 stating that prior to the Amendment Act, 2006, the Companies were not included under the definition of consulting engineer. When we have taken such a view, considering the relevant assessment year in the present case we have to hold that the service rendered by the assessee-Company during relevant period cannot be brought under the category of consulting engineer. If the service rendered by the assessee cannot be considered as a consulting engineer, the question of calling upon the assessee to pay the service tax under the Finance Act, brought the assessee under the word consulting engineer does not arise at all. Therefore, the said point has to be answered against the revenue and in favour of the assessee. After considering the contract entered into between the assessee and its employer, the case of the assessee falls under Section 65(105)(zzzza) Explanation (a) and (e). Even though the assessee's case falls under the definition of works contract, but the revenue has no power to call upon the assessee to pay service tax, interest and penalty therein, since the provisions of law has come into force with effect from 1-6-2007. In the present case, contract is for the period between 1997 to 2001. Therefore, the said question is also required to be answered in favour of the assessee against the revenue. Accordingly, the appeal is dismissed. Issues:1. Whether the CESTAT correctly set aside the order of the revenue regarding service tax on design developmentRs.2. Whether the contracts entered into by the respondent were classified as 'Works Contracts'Rs.3. Applicability of decisions relied on by CESTAT to the present case.Analysis:Issue 1:The appeal arose from the CESTAT's decision on the service tax liability of the respondent under the category of Consulting Engineer service. The Department contended that the respondent's activities fell within this ambit, leading to a demand for service tax. However, the CESTAT concluded that the respondent was not liable for service tax, interest, or penalty. The High Court analyzed the definition of Consulting Engineer under Section 65(13) of the Finance Act, emphasizing that the service provided did not fall under this category before the 2006 amendment. As the service could not be considered as consulting engineering, the Court ruled in favor of the respondent on this issue.Issue 2:Regarding the classification of the contracts, the Court referred to Section 65(105)(zzzza) defining 'works contract.' The Court noted that the relevant contract in this case fell under this definition, specifically under Explanation (a) and (e). However, as this section came into effect from 1-6-2007 and the contract was for the period between 1997 to 2001, the revenue could not demand service tax, interest, or penalty for this contract. Consequently, the Court ruled in favor of the respondent on this issue as well.Issue 3:The Court addressed the applicability of decisions cited by the CESTAT to the present case. It was crucial to determine whether the legal principles relied upon by the CESTAT were relevant and applicable to the facts of this case. The Court did not find the decisions to be in favor of the revenue, leading to a ruling against the revenue and in favor of the respondent on this issue.In conclusion, the High Court dismissed the appeal, upholding the decisions of the CESTAT in favor of the respondent on all substantial issues raised.
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